报告名称：Hua Hong Semiconductor(01347.HK)1Q results & 2Q guidance generally in line
报告类型：港股研究
报告日期：2016-05-13
研究机构：中金公司
股票名称：华虹半导体
股票代码：01347
页数：6
简介：1Q beat guidance & our estimates, but bottom linemissed due to FX losses & reduced subsidies
In 1Q16, revenue +18% QoQ to US$164.4mn(vs. +14~16% QoQ guidance and our estimate ofUS$160.3mn) due to growth across product lines –particularly in smart cards, power management, MCUs, Logic andRF – all of which will be the main drivers of strong growth in2016e. GM of 29.2% beat our estimate of 29% as higherutilization offset the impact of rising depreciation. Due to FXlosses and reduced subsidies in 1Q16, Huahong reported NP ofUS$26.7mn, missing our/consensus US$29mn/29.1mn.
Trends to watch
2Q guidance in line with our expectations; 2Q16 revenue isguided to rise 5~7% QoQ to US$173mn~176mn, mainly drivenby the following segments: 1) demand for smart cards andmid-range/low-end smartphones; 2) the company saw its keybanking card IC customer is ready to ramp up production;3) new orders for smart card, discrete and MCU. Higherutilization saw it guide a mild improvement in gross margin to29~31%. Hua Hong will continue to expand its capacity(2015/16e capex: US$176mn/150mn); with capacity expected toramp up on schedule to 164k by the end of 2016.
1Q16 recovery of both Vanguard and Hua Hong areindicative of continued healthy supply-demand in 8”foundry, because their inventory corrections have beencompleted. We also expect 6.7%/8.5% revenue growth in2016/17e with drivers from embedded flash moving to 90nm (4GSIM Cards, MCUs, and bank cards) in 2H16e, discrete andanalog/power management, with ID cards and RF flat.
Earnings revisions
We cut 2016/17e EPS by 3.1%/0.3% to US$0.09/0.10.
Valuation and recommendation
Maintain HOLD rating and TP of HK$7.14, based on 0.6x2016e P/B.
Risks
FX loss; slower-than-expected market demand.

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